Can someone tell me if this is legal?

It wouldn't exclude you but they're just letting you know that they can test for it. For some diabetics who are especially sensitive, their sugar can drop rapidly and if this has ever happened to you, you know that this can cause you to flip out and start acting very strangely before you p out. Your employer needs to know about this before you start working with children. If you have it under control then it shouldn't be a problem.